The Impact of the Judiciary on Economic Activity

Matthieu Chemin ()

Cahiers de recherche from CIRPEE

Abstract: This paper examines the consequences of slow judiciaries on firms' contracting behaviour in India. After deriving testable implications from a game theoretical model, I examine how case pendency rates in India's state courts affect the contracting behaviour of 170,000 small non-agricultural informal firms from the 2000 National Sample Survey's 55th round. I find that a slow judiciary implies more breaches of contract, discourages firms from undertaking relationship-specific investments, impedes firms' access to formal financial institutions, and favours inefficient dynasties. Moving a firm from the highest to the lowest pendency state would result in a 10% improvement in firm performance.

Keywords: Law and economics; Institutions; Courts; Contracts; Industrial Organisation; Economic Growth; Industrial Performance (search for similar items in EconPapers)
JEL-codes: C72 D23 K10 K12 K40 K42 L14 O12 O17 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cwa and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.cirpee.org/fileadmin/documents/Cahiers_2007/CIRPEE07-24.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0724

Access Statistics for this paper

More papers in Cahiers de recherche from CIRPEE Contact information at EDIRC.
Bibliographic data for series maintained by Manuel Paradis ().